Judge: Salvatore Sirna, Case: 22PSCV00600, Date: 2023-02-06 Tentative Ruling

Case Number: 22PSCV00600    Hearing Date: February 6, 2023    Dept: G

Defendant Nissan North America, Inc.’s Motion to Compel Arbitration and Stay Proceedings

Respondent: Plaintiff Alma Coronado

TENTATIVE RULING

Defendants Nissan North America, Inc.’s Motion to Compel Arbitration and Stay Proceedings is GRANTED and proceedings are STAYED pending the outcome of arbitration.

BACKGROUND

This is a lemon law action. On March 12, 2021, Plaintiff Alma Coronado leased a new 2021 Nissan Sentra and alleges an express written contract with Defendant Nissan North America, Inc. in which Defendant undertook to preserve or maintain the utility or performance of Plaintiff’s vehicle and provide compensation if there was a failure in such utility or performance. Plaintiff alleges the vehicle’s continuously variable transmission was defective.

On June 17, 2022, Plaintiff filed a complaint against Defendant, KAB Group Investments, Inc., and Does 1-10, alleging (1) violation of the Song-Beverly Act – breach of express warranty, (2) misrepresentation, (3) concealment, and (4) negligent repair.

On October 27, 2022, Defendant filed the present motion. A hearing on the motion and case management conference are set for February 6, 2023.

ANALYSIS

Defendant argues Plaintiff’s complaint is subject to a valid and binding arbitration agreement. For the following reasons, the court agrees.

Legal Standard

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)  The court must grant a petition to compel arbitration unless it finds no written agreement to arbitrate exists, the right to compel arbitration has been waived, grounds exist for revocation of the agreement, or litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.  (Code Civ. Proc., § 1281.2.) A petition to compel arbitration functions as a motion. (Code Civ. Proc., § 1290.2.)

“[T]he moving party bears the burden of producing ‘prima facie evidence of a written agreement to arbitrate the controversy.’” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).) Once the court finds an arbitration agreement exists, the opposing party bears the burden of establishing a defense to enforcement by preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) In interpreting an arbitration agreement, courts apply the same principles used to interpret contractual provisions with the fundamental goal of giving effect to the parties’ mutual intentions and applying contractual language if clear and explicit. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) Because public policy strongly favors arbitration, “any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.)

Existence of an Arbitration Agreement

Under the Federal Arbitration Act (FAA), the court’s role “is limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 840, quoting U.S. ex rel. Welch v. My Left Foot Children’s Therapy, LLC (9th Cir. 2017) 871 F.3d 791, 796.)

In this case, Defendant claims Plaintiff entered into a binding arbitration agreement when Plaintiff leased Plaintiff’s vehicle. The Defendant notes the sales contract included the title “Motor Vehicle Lease Agreement with Arbitration Clause – California” and points to an arbitration provision on the second page of the sales contract. (Motion, p. 9:1-25.) In relevant part, the arbitration provision states as follows:

“Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.” (Motion, p. 10:9-13.) 

The court notes Defendant was not a signatory to the lease agreement including the arbitration provision, which was between Plaintiff and Ross Nissan of El Monte. However, “there are six theories by which a non-signatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary’ [Citations].” (Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1513, quoting 2 Oehmke, Commercial Arbitration (3d ed. 2006 update) § 41.57 at p. 41-195.) Defendant claims the right to enforce the arbitration provision under equitable estoppel and as a third-party beneficiary.

Validity

As an initial matter, the court addresses whether Defendant has established the existence of an arbitration agreement. To establish prima facie evidence of an arbitration agreement, the party moving for arbitration need only provide a copy of the arbitration provision that purports to be signed by the parties or set forth the agreement’s terms in the motion. (Gamboa, supra, 72 Cal.App.5th at p. 165.) The moving party is not required “to follow the normal procedures of document authentication.” (Ibid, quoting Condee, supra, 88 Cal.App.4th at p. 218.) The opposing party “bears the burden of producing evidence to challenge the authenticity of the agreement” and can do so with statements under oath. (Ibid.) If the opposing party meets their burden, the moving party must then establish a valid arbitration with admissible evidence by preponderance of the evidence. (Ibid.)

Here, Defendant set forth the agreement’s terms verbatim in Defendant’s motion. (Motion, p. 9-10.) Plaintiff argues Defendant failed to establish the existence of an arbitration agreement because Defendant did not attach a copy of the arbitration agreement to the motion. However, as noted in Gamboa, Defendant is not required to follow normal document authentication procedures and can provide the agreement’s terms verbatim in the motion, as was done here. Once Defendant does that, the burden is on Plaintiff to challenge the agreement’s authenticity with evidence. Thus, because Plaintiff has not done so, the court finds a valid arbitration agreement exists.

Equitable Estoppel

The court next addresses whether the arbitration agreement is applicable to this action under equitable estoppel. Under equitable estoppel, “a non-signatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the non-signatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.) A signatory’s claims are intertwined with the agreement containing the arbitration provision if “based on the same facts and are inherently inseparable from arbitrable claims against signatory defendants.” (Turtle Ridge Media Group, Inc. v. Pacific Bell Directory (2006) 140 Cal.App.4th 828, 833, quoting Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713-1714.)

In arguing Plaintiff’s claims are intertwined with their obligations under the sales contract, Defendant cites Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 (Felisilda) as binding authority. In Felisilda, the court held a non-signatory automobile manufacturer could compel plaintiffs in a lemon law action to arbitration because the sales contract expressly required arbitration for “claims arising out of the condition of the vehicle – even against third party nonsignatories to the sales contract.” (Id., at p. 497.) The court noted plaintiffs’ lemon law claim “directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract.” (Ibid.)

The court finds Felisilda applicable and controlling here. The arbitration provision covers any claim or dispute “which arises out of or relates to your . . . purchase of condition of this vehicle.” (Motion, p. 10:6-9.) In Felisilda, the court noted plaintiffs established the sales contract was the source of the warranties at issue in that case because plaintiffs pled “that ‘express warranties accompanied the sale of the vehicle to [them] by which [manufacturer] . . . undertook to preserve or maintain the utility or performance of [their] vehicle or provide compensation if there was a failure in such utility or performance.” (Id., at p. 496.)

In Plaintiff’s complaint, Plaintiff’s lemon law claims “arise from warranty obligations of [Defendant] in connection with a vehicle leased by [Plaintiff].” (Complaint, ¶ 5.) Like in Felisilda, Plaintiff’s claims arise from warranties that accompanied the lease of the vehicle under the leasing contract. Also, both cases involve an arbitration agreement that explicitly applies to claims involving the condition of the vehicle and including third parties. Plaintiff provides no argument to the contrary and fails to raise any defense or bar to enforcement.

Accordingly, the court GRANTS Defendant’s motion.

CONCLUSION

Based on the foregoing, Defendant’s motion to compel arbitration is GRANTED. This action is STAYED pending completion of arbitration.